The market outlook for facility managers and building owners in 2025 stands in stark contrast to 2024. The Federal Reserve's steady easing of interest rate policy, coupled with firmer decisions on office attendance patterns, has brought greater clarity and activity to the market. However, how the incoming Trump administration will adjust energy, labor, and tax policies, thereby affecting building investment and operations, remains an open question.

After years of collecting data on occupancy rates, energy usage, and asset health, building operators are looking to innovative artificial intelligence applications to leverage this data to improve processes, systems, and operations. The goal: optimize space and system design, enhance asset value and attract tenants, while saving costs and mitigating the impact of skilled labor shortages.

The rise of AI across nearly all industries and sectors is driving rapid acceleration in the data center market, encompassing its power demands, market activity, and cooling requirements. While new projects address power availability challenges, existing facilities are also under pressure to upgrade infrastructure and cooling systems to meet the demands of more advanced systems and energy efficiency requirements.

Here are six key trends facility managers need to focus on in 2025.

Commercial goals and local policies drive building sustainability

A report released by JLL in November shows that increasingly stringent climate regulations and corporate ESG priorities are driving facility managers and owners to increase investment in green building technologies. However, given President-elect Donald Trump's criticism of related policies, the incentives of the Inflation Reduction Act face uncertainty. Trump's agenda advocates reversing the Biden administration's policies supporting renewable energy, electrification, and energy efficiency, raising concerns among owners and operators who are utilizing IRA tax incentives for energy-efficient building retrofits.

Owners and operators of large commercial buildings are not heavily reliant on IRA incentives, said Jennifer Knuckles, CEO of R-Zero. The company develops energy optimization tools for commercial real estate. Knuckles noted that owners view energy efficiency measures as opportunities, prioritizing initiatives that can enhance building value.

Megan Crester, Associate Director of ESG and Sustainability for Cushman & Wakefield's Energy and Sustainability Services team, emphasized that energy efficiency upgrades require a phased, data-driven approach. "Quantifying energy use intensity to determine payback periods helps build a stronger business case for investment," Crester said.

Paul Morgan, Global Chief Operating Officer of JLL Work Dynamics, believes that without federal government push for building decarbonization, local governments and multinational corporations will lead the way. Morgan stated that multinational organizations operating in regions with aggressive decarbonization strategies are expected to adopt an enterprise-wide holistic approach to coordinate sustainability efforts, rather than a "single-country approach."

Skilled labor shortage persists

Demand remains strong in facility management for skilled trades such as HVAC technicians, plumbers, and electrical service professionals. Andy Walker, partner in McKinsey & Company's People and Organizational Performance practice, pointed out that although the U.S. unemployment rate rose slightly to about 4.2% in November, employers still struggle to fill vacant skilled positions.

Walker emphasized that training and upskilling are crucial to addressing the tight labor market. "By reducing the time it takes for employees to reach basic proficiency, employers are betting on sustainable operations with fewer workers," he said.

The U.S. Department of Labor recently withdrew a proposal to reform government-registered apprenticeship programs, which aimed to strengthen labor standards and further promote apprenticeship pathways. Ben Brubeck, Vice President of Regulatory, Labor, and State Affairs at Associated Builders and Contractors, called the Labor Department's decision a "welcome development." ABC had previously criticized the proposal, arguing it would increase regulatory burdens and costs for small businesses, potentially exacerbating labor shortages. Brubeck stated: "Government-registered apprenticeship programs were already underutilized due to cumbersome regulations and their failure to meet the needs of many employers and apprentices."

To address the skilled worker shortage, Katie Gramajo, Senior Education Facilities Specialist at Brightly Software, said: "In 2025, teams will shift to a hybrid work model combining centralized and distributed employees."

AI and automation continue to grow in building operations

After years of focusing on collecting building data, facility managers now hope artificial intelligence can help them use this data to aid decision-making and, combined with automation, achieve streamlined and optimized operations.

The International Facility Management Association's October "AI Application Guide for Facility Management" notes that service providers are working to integrate generative AI into their systems and operations to help facility managers diagnose and solve problems more effectively and assist in training new employees. The guide cites examples of AI being used to automate routine time-consuming tasks, optimize operational processes, and monitor equipment in real-time to identify inefficiencies and suggest improvements.

Meanwhile, more traditional machine learning and automation are also accelerating. AI-driven energy usage models are being used to determine optimal building control strategies and program automatic adjustments to system setpoints for more efficient building operations.

However, Sharad Rastogi, CEO of JLL Work Dynamics Technology, said efforts so far are just the tip of the iceberg. "There is still enormous opportunity. The vast amount of data generated by sensors and automation systems is not truly being utilized. I don't think we have truly realized the full benefits of building automation because not all the pieces are fully connected yet, and that's what we're going to do this year," Rastogi said.

Return-to-office and office space upgrades focus on employee experience

The office market remains in flux as organizations navigate space decisions, evolving workplace models, and shifting employee and tenant preferences. Hybrid work arrangements are expected to persist, with many tenants accepting current attendance levels as the new normal. Meanwhile, a survey of 198 real estate professionals by CBRE and CoreNet Global found that over half of respondents plan to increase office attendance above current levels.

A Unispace survey shows that in-person collaboration remains the primary driver for employees coming to the office. But Unispace noted in a recent report that challenges persist, including space configuration, noise, distractions, and a continued lack of actionable insights related to workplace design.

Ross Leibowitz, Senior Director of Workplace Products at Tango, said operators are working to use occupancy data and workplace experience to better align employee and employer expectations. "Employee experience truly begins with understanding pain points and being able to help alleviate them. I think everyone has to understand what works for their own organization," Leibowitz said.

Due to demand for top-tier office space, vacancy rates in prime buildings have declined for multiple consecutive quarters, but Julie Whelan, CBRE's Global Head of Occupier Thought Leadership, said in an interview: "There is virtually no new development from here on out. This means that some buildings that may be of lower quality but located near prime buildings should invest capital in upgrading themselves." Whelan said: "Existing offices actually require a lot of upgrades and renovations. Everyone is talking about retrofits... but the reality is that there are quite a few buildings that need to be brought up to standard."

Industry adapts to data center growth and power challenges

Data centers are increasingly focusing on cleaner, more efficient power and streamlined operations to help meet the surging demand for computing power driven by AI.

"On the supply side, data centers under construction are expected to reach record highs in 2025," said Gordon Dolven, Director of Americas Data Center Research at CBRE, during a 2025 webinar. "As hyperscale cloud providers and enterprises plan to expand their digital infrastructure, demand for modern data center facilities continues to surge, and the scale of data center development in 2025 will make projects above 100 megawatts the new normal."

To address these demands, data center operators are seeking specialized technical expertise to help them find high-density liquid cooling application solutions that meet advanced computing needs, while ensuring energy efficiency and operational flexibility to support both new and existing infrastructure.

In response, commercial real estate companies, service providers, building automation suppliers, tech giants, and energy suppliers are joining forces to enhance their specialized capabilities. Some expect merger and acquisition activity in the data center services industry to reach new heights. Roger Little, CEO of Rexel USA, a distributor and manager of electrical, heating, lighting, and plumbing equipment, told TED Magazine: "If I were to predict, I think 2025 will be a record year for M&A."

Federal employee return-to-office mandates and layoffs may impact federal office space

Tesla and SpaceX CEO Elon Musk and former pharmaceutical executive and Republican presidential candidate Vivek Ramaswamy have been selected to lead President-elect Trump's Department of Government Efficiency. In a November Wall Street Journal op-ed, the two outlined plans for federal workforce reform, calling for significant reductions in the size of the federal workforce and requiring remaining employees to return to the office five days a week.

David Marroni, Director of Physical Infrastructure at the U.S. Government Accountability Office, said a full return-to-office mandate would increase utilization of federal office buildings to varying degrees. But Marroni noted that despite increased on-site presence, some federal buildings may still be "significantly underutilized."

The Office of Management and Budget reported in August that the federal government spends nearly $8.1 billion annually on owned or leased office space, including $81 million on space it considers "underutilized." OMB reported that agencies plan to reduce millions of square feet of office space to improve space utilization and reduce costs.

On January 4, President Joe Biden signed a law containing provisions for the federal government to cut wasteful spending on unused leased office properties, including setting and enforcing occupancy rate standards. However, Marroni said that if return-to-office mandates are implemented, some agencies that have downsized their portfolios since the COVID-19 pandemic and no longer have sufficient space to support increased on-site staffing may need to acquire more space.